43
States shortening length of unemployment benefits
ASSOCIATED PRESS
Photo
In this Nov. 4, 2009, file photo, job seekers attend a job fair in Livonia, Mich. Some states that have drained their unemployment insurance funds are cutting the number of weeks that a laid-off worker can count on those benefits. Michigan, Missouri and Arkansas recently reduced the maximum number of weeks that the jobless can get state unemployment benefits, and Florida is on the verge of doing so. Unemployment in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida.
Associated Press
WASHINGTON
Some of the states that have drained their unemployment-insurance funds are cutting the number of weeks that a laid-off worker can count on those benefits. Legislators are trying to limit tax increases for businesses to replenish the pool and are hoping the federal government keeps stepping in when the economy slumps.
Michigan, Missouri and Arkansas recently reduced the maximum number of weeks that the jobless can get state unemployment benefits. Florida is on the verge of doing so. Unemployment in those states ranges from 7.8 percent in Arkansas to 11.1 percent in Florida.
The benefit cuts come as legislatures deal with the damage that the recession inflicted on state unemployment-insurance programs. The sharp increase in the number of people who lost their jobs drained the reservoir of money dedicated to paying out benefits.
About 30 states borrowed more than $44 billion from the federal government to continue payments to laid-off workers. Many states hastened the insolvency of their funds by keeping balances at historically low levels going into the downturn.
The burden of replenishing the funds and paying off the loans will fall primarily on businesses through higher taxes, but the benefit cuts are an effort to limit the tax increases.
States usually provide up to 26 weeks of benefits to laid-off workers. Michigan and Missouri have cut that to a maximum 20 weeks. Arkansas went to 25.
Florida is considering a more complex change that would link the duration of benefits to the strength of the economy. The cap would range from 23 weeks during periods of double-digit unemployment to as low as 12 weeks during periods of extremely low unemployment. The Florida Legislature approved the changes, but the governor hasn’t signed the bill.
Once state benefits are exhausted, laid-off workers often are eligible for 13 weeks to 20 weeks of extended benefits. States and the federal government usually split the cost for that program. During recessions, Congress typically takes the aid a step further, providing several more months of emergency benefits paid for entirely by the federal government.
The actions taken by legislatures apply specifically to state benefits, but also will reduce future federal benefits because the changes affect the formula used to calculate them.
Allen McClendon, 40, of Kansas City, Mo., said he lost his job as a mechanic in August 2010 and has been getting unemployment benefits in Missouri since February. He said the payments allow him to buy food, make payments on his pickup truck and pay for gas and auto insurance. He is worried about what will happen if his state and federal benefits run out before he lands a job.
Before that happens, he hopes to get training from a Missouri employment center that would allow him to get a commercial driver’s license or to repair heating and cooling units.
“If they run out before I’ve completed my schooling and have got a job, then I’m really in trouble,” he said. “I’d so much rather be working than dealing with this,” he said.